june 03 paper

NAJC

Hey just wondering if anyone has the answers for the june 2003 paper for pev?
thanks

SandyHood

Yes
Have you answered all of it?

NAJC

yes i have. could you email me them ? .

SandyHood

NAJC
My email is my signature

SandyHood

June 2003

Section 1 Croxton Ltd make chemical X14
A rare example of a standard costing question where overheads are absorbed on a machine hour basis.
The apportioning of budgeted and actual factory fixed overheads on the basis of budgeted machine hours appeared in a few papers around that time, but have not been in any papers since that examiner retired.
The question is useful (perhaps more as an aid to understanding the techniques rather than final exam preparation).
You have to understand cost calculation and be able to find the actual labour rate and actual materials (litres) used rather being given them.
A fine opportunity for variance calculation and an operating statement.
Very often, I've marked homeworks where the total factory actual fixed overheads rather than just those for the processing department were used. In fact when I use this for introductory students I sometimes calculate the overheads for them (modifying the original question).

I like 1.2, and this sort of question continued to be assessed when Andy Royle became examiner a few years later.
You have to take the variances apart and examine whether the production manager's assertions are justifiable:

1. use the index to find the part of the material price variance due to inflation
2. look at the usage variance, and the two labour variances in relation to the scrapped barrel
3. and feedback your findings

Section 2 is one of my favourites (and I have often taught this by reference to the Meg Ryan/Tom Hanks film "You've got mail"

See how this theme is ever present in the section 2 questions set by the current examiner. Two businesses, apparently the same, but really quite different in terms of ratios. The Shoppe Around The Corner was not just selling books, the customer service etc was much more important to them whereas Fox books was a supermarket for books basically looking at low customer service and high sales volume.

Then go back to Alderton and Brandon and try to visualise what is going on. The current examiner, Cliff Floyd did a very good question (I think in 2006) based on 2 companies selling brakes for cars - exactly the same underlying concept of similar apparent products but completely different business models.
In task 2.2 there is a task I tell students to ignore nowadays. The then examiner often wanted to split efficiency from productivity, something we had to live with at the time. Now the examiner recognises that they are both effectively the same.
The other questions are good, and require you to look at ratios (in this case mainly ROCE) and how company policies on depreciation or stock valuation can influence the ratios.